◆ EX UNO – PLURA ◆
VenTree is not a classic incubator or accelerator which, in exchange for a small share of equity, helps third-party founders.
VenTree’s internal ideation process looks for and identifies voids (a.k.a. unsolved problems and inefficiencies) in the marketplace and, where technology can solve these voids, we assess whether a solution can be marketed and developed into a sustainable growth venture.
When we identify a need, a solution, and an opportunity to create new value for potential users and our investors – VenTree forms and launches a startup focused on creating such value.
v. Venture Builders (VBs)
VCs and incubators skim through third-party pitch decks and often invest in startups based on arbitrary principals and impulses.
VBs don’t invest in third-party startups but rather act as founders or majority co-founders.
Familiarity with the startup’s vision and strategy
The familiarity of a VC with the PortCo’s vision and strategy is limited to information derived from short pitches and occasional reports and communications.
VBs, as co/founders of their PortCos, participate in the conception, development, and evolution of the PortCo’s business models, vision, and strategy.
Familiarity with the PortCo’s daily operations, expenses, and traction
VCs only receive sporadic general updates from the founders and often learn of problems when it is too late to correct them.
VBs are intimately involved with every decision and are integrated with the executive teams of their PortCos.
Hiring and firing decisions
VCs have very limited sway with regard to hiring and firing decisions made by their PortCos.
VB have absolute and exclusive control of all hiring and firing decisions made by their PortCos.
Efficient use of resources
Shortly after being funded, VC PortCos must invest time and resources to recruit a large and expensive team and secure office space.
A VB startup gradually ramps up its use of resources. The VB lends its PortCos software engineers, executives, marketing, and other personnel on a “fractional” time-sharing basis. As the VB’s PortCo grows, it can hire and build its own dedicated team without pressure.
Risk to invested capital
One of every two VC PortCos, 50% of them, completely fail. VCs hand significant capital over to their PortCos and typically have no recourse when these PortCos fail.
VBs invest small sums as the startup grows and only if and when necessary and justified. VBs are thus able to cull failures and cut losses without risking significant capital.
Fundraising
Through multiple rounds, founders and CEOs of VC PortCos typically spend significant time seeking and pitching to potential investors.
VBs manage the entire fundraising process for their PortCos, leaving their PortCos’ executive teams free to focus on the PortCos’ business.
Say in management of PortCos
VCs have a very limited role in the management of their PortCos.
VBs manage or oversee the management of their PortCos.
Say in exit-path plans
VCs have little-to-no influence over the exit plans and routes of their PortCos.
VBs have full and absolute control over the exit plans and routes of their PortCos.
Equity in PortCos
While VCs write bigger checks to their PortCos than VBs do, VCs receive only single-digit percentages of their PortCos’ equity. VCs’ equity in their PortCos is also subject to significant dilution unless they pay-to-play at exponentially increasing valuations.
VBs invest in their PortCos smaller amounts than VCs do and in smaller increments. VBs, as co/founders of their PortCos, own a majority Founder-Stake in each of their PortCos. VenTree, for example, holds a non-dilutable 51% Founder-Stake in each of its PortCos.
Syndication
VCs invest in each round (Seed, A+) as part of a syndication. The syndicate, as a group, receives a small portion of the PortCo’s equity (typically 10%-25%) and participating VCs receive a pro rata fraction of the equity acquired by the syndicate in the round.
VenTree, as a co/founder of its PortCos, holds and maintains a majority (51% non-dilutable Founder-Stake) in each of its PortCos. Rather than having to share a small slice of the pie with syndication peers like VCs do, VenTree owns a majority of the pie.
Runaway valuations
VCs have to compete with thousands of other investors, resulting in a “seller’s market” for startups and runaway valuations, which increase the VCs’ risk exposure.
VBs, as co/founders and holders of majority Founder-Stakes in each of their PortCos, only stand to benefit from these rapidly increasing valuations.
Direct LP co-investment
VCs can offer their LPs direct or Side-Car investment opportunities in their PortCos but only Pro Rata to the VC’s limited equity investment in specific rounds in which the VC participates.
VB’s, as co/founders in control of their PortCos, have expanded discretion to offer their investors direct or Side-Car investment opportunities in current and future offerings (rounds) made by their PortCos. Investing in VenTree is akin to investing in a growing portfolio of co/founders (Founder-Stakes) and, simultaneously, in an open-ended Side-Car investing in a growing portfolio of PortCos.
In association with NYVC Ventures
x
x
“Innovation is change that unlocks new value.”
Jamie Notter
“The best way to predict the future is to create it.”
“Sometimes, when you innovate, you make mistakes; it is best to admit them quickly and get on with improving your other innovations.”
Steve Jobs
